Abstract
Few studies on supply location decisions focus on enhancing triple bottom line (TBL) sustainability in supply chains; they rarely employ objective quantifiable measurements which help ensure consistent and transparent decisions or reveal relationships between business and environmental trade-off criteria. Therefore, we propose a decision-making approach for objectively selecting multi-tier supply locations based on cost and carbon dioxide equivalents (CO2e) from manufacturing, logistics, and sustainability-assurance activities, including certificate implementation, sample-checking, living wage and social security payments, and factory visits. Existing studies and practices, logic models, activity-based costing, and feedback from an application and experts help develop the approach. The approach helps users in location decisions and long-term supply chain planning by revealing relationships among factors, TBL sustainability, and potential risks. This approach also helps users evaluate whether supplier prices are too low to create environmental and social compliance. Its application demonstrates potential and flexibility in revealing both lowest- and optimized-cost and CO2e supply chains, under various contexts and constraints, for different markets. Very low cost/CO2e supply chains have proximity between supply chain stages and clean manufacturing energy. Considering sustainability-assurance activities differentiates our approach from existing studies, as the activities significantly impact supply chain cost and CO2e in low manufacturing unit scenarios.
Highlights
Making strategic decisions on where to source materials and manufacture products has become a difficult task, as products may have raw and intermediary materials from many different locations and be assembled in different places, near or far, from its customers and focal firms who govern product supply chains
Environmental and social issues often occur at manufacturing sites of sub-suppliers [3]. These issues lead to more studies towards multi-tier sustainable supply chain management involving several aspects such as managing suppliers and sub-suppliers, sourcing from low-risk countries and locations, governance structure, environmental performance improvement, and physical and institutional distance between focal firms and suppliers [3,4,5,6,7,8]. Some of these studies, as well as other studies on sustainable manufacturing, have mentioned positive impacts of physical and institutional proximity on sustainable practices for enhancing triple bottom line (TBL) sustainability due to, for example, short distances allowing for easy inspection and governance visits to suppliers, as well as effective local environment- and social-related laws [3,7,8,9]
We found that the Dou and Sarkis [28] study incorporated TBL factors into their offshoring outsourcing decisions model, their model is based on subjective opinions from managers for pairwise comparisons among factors rather than on objective measured performance for comparing different locations and suppliers
Summary
Making strategic decisions on where to source materials and manufacture products has become a difficult task, as products may have raw and intermediary materials from many different locations and be assembled in different places, near or far, from its customers and focal firms who govern product supply chains. These issues lead to more studies towards multi-tier sustainable supply chain management involving several aspects such as managing suppliers and sub-suppliers, sourcing from low-risk countries and locations, governance structure, environmental performance improvement, and physical and institutional distance between focal firms and suppliers [3,4,5,6,7,8] Some of these studies, as well as other studies on sustainable manufacturing, have mentioned positive impacts of physical and institutional proximity on sustainable practices for enhancing TBL sustainability due to, for example, short distances allowing for easy inspection and governance visits to suppliers, as well as effective local environment- and social-related laws [3,7,8,9]. The structure of this paper is as follows: Section 2 shows how the SLDM approach is formulated, as well as diagrams of the ten-step SLDM approach, suggested factors and computational scopes, and pathways and interconnection of factors, cost, CO2e, and TBL sustainability; Section 3 explains the ten steps of the SLDM approach in detail; Section 4 demonstrates the application of the SLDM approach in viscose t-shirt supply chains; and Section 5 draws conclusion, research contributions, limitations, and implications, as well as practical and social implications
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